So what’s BHP Billiton’s outlook on the world economy and commodity markets.
The upshot is that the company is more confident than it was a year or six months ago, but cost pressures remain a concern.
Here’s what it said in yesterday’s profit announcement.
"Industry wide cost pressures are being experienced across a broad range of projects and reflect stronger producer currencies, particularly in Australia, as well as underlying inflation on raw material and labour costs.
"Inflationary pressure on input costs across all businesses had an unfavourable impact on Underlying EBIT of US$283 million. The effect was most evident in Australia and South Africa. "
And on the outlook, BHP said that it was "cautiously optimistic on the short term outlook for the global economy given the continuation of robust growth in emerging markets and further positive signs of a sustainable recovery in major developed economies such as the United States."
"In the 2010 calendar year, Chinese Gross Domestic Product (GDP) grew by more than ten per cent, with fourth quarter growth accelerating from the third quarter level, while India’s GDP growth approximated nine per cent.
"The strong growth has been accompanied by higher inflation in these and other emerging economies and will inevitably bring further tightening measures.
"Should monetary policy tools continue to be implemented effectively and proactively, then inflation should be contained.
"However, inflation does remain a serious challenge as the underlying drivers are structural rather than cyclical in nature.
"We expect that the Chinese government will continue to control loan growth as it strives to dampen investment from unsustainable levels while restructuring its economy from being investment driven, to consumption led. Calendar year 2011 GDP and capital spending growth in China is expected to remain strong in absolute terms, despite growth rates decelerating from 2010 calendar year levels.
"Global industrial production, retail sales and consumer confidence improved throughout the last quarter with the United States and the two largest economies within Europe (Germany and France) increasing capacity utilisation and experiencing broad based growth.
"An ongoing risk remains the significant level of European sovereign debt.
"We believe that any solution remains dependent on the stronger members of the European Union (Germany, the Netherlands and France) and their willingness to underwrite the fiscal position of the weaker economies in order to maintain a monetary union.
"Despite the short term risks, we remain positive on the longer term outlook for the global economy.
"We expect markets to be volatile and event driven, however the continuing urbanisation and industrialisation of emerging economies, which is still in its early stages, should provide strong structural support over the long term."
Commodities Outlook
"The increase in prices across the majority of BHP Billiton’s core commodities during the December 2010 half year has been driven by a combination of robust emerging market demand, stronger than expected developed market growth and ongoing supply constraints.
"Adverse weather patterns in many producing countries, such as Australia, Brazil, Colombia, South Africa and Indonesia have had a substantial impact on supply, leading to tighter market fundamentals and stronger prices for commodities such as coal, iron ore and copper.
"There will likely be a lag effect before normal levels of production flow through to the supply chain.
"Macroeconomic themes are still a dominant influence on short term price movements and sentiment.
"While we expect a slowdown in the growth rate of global commodity demand in calendar year 2011, the economic environment still underpins a robust near term outlook for our products.
"The publication and implementation of China’s twelfth five year plan in March 2011 will have important implications for commodity demand in the medium term.
"We expect a slower but more sustainable economic growth model to lead to a reduction in resource intensity per unit of GDP; however absolute demand for our commodities is likely to remain strong.
"Longer term, we remain confident in the outlook for our core commodities based on emerging markets being the principal drivers of growth.
"Prices will ultimately be determined by the marginal cost of supply, with the quality of our tier one assets well positioned to sustainably deliver strong margins and investment returns through the cycle," BHP concluded.
So no real fears, unlike a year or so ago, but concerns about the usual things major companies are worried about.
Note two other points. Comment on China occupied the biggest part of the discussion, and those cost pressures that concerned BHP elsewhere, didn’t make into the outlook.
